Which country will have a higher wage

Assignment Help Business Economics

Reference no: EM131424601

Assume that Home can produce two goods, apples and bananas. The unit labor requirement in apple production is 4, while it is 2 in banana production. Foreign’s unit labor requirement for apples is 8 and it is 2 for bananas. Assume that when these countries trade, Home specializes in apples, Foreign specializes in bananas and the world relative price of apples (PA/PB) = 2.

a. If these countries trade, which country will have a higher wage? Why is this the case?

b. Using a numerical example for prices, show how wages are derived in each country when they trade with each other.

Reference no: EM131424601

Questions Cloud

Compute the dynamically efficient production plan : Consider the following market demand function for coal is pt = 200 - 0.1qt: A mining company own a coal mine that has recoverable deposit amount of 2000 tonnes. The firm’s marginal extraction cost is $50 per unit. compute the dynamically efficient pr..

Mediators require them to maintain strict confidentiality : Professional codes of ethics for mediators require them to maintain strict confidentiality. No matter what they are told by a disputing party, they cannot reveal it to anyone else. Is this a good thing, or should they revise their codes of ethics?

What advice would you give for cost saving measures : As economists of the following companies, what advice would you give for cost saving measures for the start-up businesses in the U.S. economy such as Intel, Starbucks, Microsoft, Dell, Google and Cisco Systems?

Elaborate on my in the monoply case : Can you please elaborate on my in the monoply case the MR curve is below the market demand curve? Also, please elaborate on why the market supply curve is the same as the MC curve. Please include graphs to assist with explainations.

Which country will have a higher wage : Assume that Home can produce two goods, apples and bananas. The unit labor requirement in apple production is 4, while it is 2 in banana production. Foreign’s unit labor requirement for apples is 8 and it is 2 for bananas. If these countries trade, w..

Consider the principal-agent problem discussed in lecture : Consider the principal-agent problem discussed in lecture, with the constraint that s greaterthanorequalto 0. At what level of u does the optimal contract result in agent effort being set to its first-best level?

Draw the relative supply curve : Home has 1,200 workers. It can produce two goods, apples(QA) and bananas(QB). The unit labor requirement in apple production is 3, while it is 2 in banana production. Draw the PPF for home(with the production of apples on x-axis). what is the opportu..

Operates cattle feed lots in several midwestern states : Agri-Beef Inc. operates cattle feed lots in several midwestern states. The company wishes to estimate the average daily weight gain of cattle on their lots. To do this a simple random sample of cattle is taken and the daily weight gain is recorded. D..

Assume the specific demand equation : Assume the following specific demand equation: p = 9 – 0.3q; r = 0.1; R= 80; mc = 2. Suppose the resource price is currently $3 per unit. What is the depletion year for this resource under perfection completion?

User Account

All Pages